Red wine prices to drop, white wine to rise in fallout from China tariffs, COVID-19

Red wine prices will drop, while white wine costs will rise as Australia cops the fallout from COVID-19 and China’s wine tax.

Red wine prices will drop, while white wine prices are tipped to rise as part of the fallout from COVID-19 and China’s import taxes on wine.

The latest Australian agriculture outlook released yesterday also predicts wine exports will drop this financial year, while Australian wine grape prices will fall 28 per cent to $500 a tonne.

“Prices of white wines are likely to rise as stocks fall, partly due to the COVID-19–related distillation of wine stocks into industrial alcohol in Europe,” the Australian Bureau of Agricultural and Resource Economics and Sciences report says.

Red wine prices will fall from the combined impact of reduced demand in China due to the pandemic and Beijing’s recent decision to slap an import tax of up to 212 per cent on Australian wine during its anti-dumping inquiry.

White wine prices are tipped to rise as part of the fallout from COVID-19 and China’s import taxes on wine.

The outlook comes as Australia’s wine sector officially responded yesterday to China’s tariff decision.

The content of the response is yet to be made public but Australian Grape and Wine chief executive Tony Battaglene said it was hoped Beijing would, in turn, remove the unwarranted tariffs.

But Australia’s official response was also important evidence if the nation eventually needed to mount a challenge to the wine tax at the World Trade Organisation, he said.

A snapshot of South Australia’s wine industry, which canvassed 63 local wine makers, shows 92 per cent were concerned about the impact of China’s anti-dumping inquiry on their business.

But the report, by the SA Wine Industry Association and advisory firm Bentleys SA/NT, shows most SA wine businesses plan to have the same number of staff or hire new staff this financial year, and less than 10 per cent say they will reduce staff.

About 65 per cent said their business confidence had declined over the past 12 months, while 74 per cent were concerned about the mental health of their workforce.

SAWIA chief executive Brian Smedley said it had been “the most disruptive year in recent history” for SA’s wine industry, but welcomed innovation and new strategies developed in response to COVID-19, including virtual tasting sessions.

“You’ll see some price adjustments going through system, and probably the higher levels of profitability that some companies enjoyed will come down,” he said.

South Australian Wine Industry Association chief executive Brian Smedley in the barrel hall at Magill Estate Winery, SA. Picture: Alice Prokopec